South Dakota is a U.S. state in the upper Midwestern United States. It is named after the Lakota and Dakota Sioux Native American tribes, who comprise a large portion of the population and historically dominated the territory. South Dakota is the seventeenth largest by area, but the 5th least populous, and the 5th least densely populated of the 50 United States. As the southern part of the former Dakota Territory, South Dakota became a state on November 2, 1889, simultaneously with North Dakota. It is either the 39th or 40th state admitted to the union. President Benjamin Harrison shuffled the statehood papers before signing them so that no one could tell which became a state first. Pierre is the state capital, and Sioux Falls, with a population of about 187,200, is South Dakota’s largest city.
While several Democrats have represented South Dakota for multiple terms in both chambers of Congress, the state government is largely controlled by the Republican Party, whose nominees have carried South Dakota in each of the last 13 presidential elections. Historically dominated by an agricultural economy and a rural lifestyle, South Dakota has recently sought to diversify its economy in areas to attract and retain residents. South Dakota’s history and rural character still strongly influence the state’s culture.
Except as otherwise provided in this tax fact sheet, tangible personal property and services sold at auction are subject to state sales tax, plus applicable municipal sales tax.
The auction clerk is responsible for remitting the sales tax on the gross receipts from each auction, after deducting allowable direct expense charges. However, the auctioneer is responsible for payment of the sales tax on the auction receipts if:
- The auction clerk is an employee of the auctioneer; or
- The auction clerk does not have a South Dakota sales tax permit.
A benefit auction is an auction organized by a religious, benevolent, fraternal organization, youth association or charitable activity to raise money for a religious, benevolent, youth or charitable purpose. A charitable purpose includes raising money for a family in need, such as a home destroyed by fire or flood, or a person with large medical bills. If all the items are donated, the gross receipts from a benefit auction are not subject to sales tax. Retailers owe use tax on the cost of donated items that are taken from tax unpaid inventory. Items donated directly to exempt entities are not subject to use tax. Clerking and auctioneer services provided at no charge are not subject to sales tax.
Auctioneer services are subject to state sales tax, plus applicable municipal sales tax. Sales tax is based on where the auctioneer service is performed. At real estate auctions, the auctioneer’s service is taxed where the real estate is located. An auctioneer typically charges a commission or percentage of the sale for their services. They may also charge the buyer or seller additional fees such as administrative or buyer’s fees. These fees are also subject to sales tax.
The auctioneer’s fees are subject to sales tax regardless if the product sold is taxable or exempt. Fees for online auction services are subject to sales tax. This may include listing fees, selling fees, buyers fees, fees to post pictures, and any other fees used to run the auction.
Auction Clerk Services
Auction clerk services are subject to state sales tax, plus applicable municipal sales tax.
Sales tax is based on where the auction clerk service is performed. At real estate auctions, the auction clerk’s service is taxed where the real estate is located.
Sales for Resale
Tangible personal property or services purchased at auction may be purchased for resale if the buyer provides an exemption certificate.
An auctioneer may sell his or her services to another auction clerk or auctioneer for resale if the auction clerk or auctioneer provides an exemption certificate. If the auctioneer purchases the clerk’s services for resale, the clerk’s fees charged to the client must be included in the auctioneer’s total receipts. It is the buyer’s responsibility to know when a service or product qualifies as a sale for resale. The seller is responsible for maintaining a complete exemption certificate.
Purchase for Resale
Auction clerks or auctioneers must give an exemption certificate to their suppliers in order to purchase services and supplies exempt from sales tax. Supplies or services purchased for resale may not be deducted from the auction’s gross receipts as direct expenses. State law requires exemption certificates to be complete and accurate. The buyer will be held responsible for properly completing an exemption certificate. Exemption certificates may be obtained from the department’s website, http://dor.sd.gov, or by calling 1-800-829-9188.
Supplies, materials, or services purchased without an exemption certificate are subject to use tax, if sales tax was not paid at the time of purchase. State use tax plus applicable municipal use tax are payable to the Department of Revenue in the filing period in which the auction clerk or auctioneer receives the supplies or services.
Tangible personal property delivered into South Dakota by the supplier is subject to the South Dakota sales or use tax, even if the supplier charges another state’s sales tax. When a purchase is made out-of-state and possession is taken out-of-state the supplier may charge that state’s sales tax. If the other state’s sales tax is the same or more than South Dakota’s tax, there is no South Dakota tax owed. If it is less than South Dakota’s, the difference must be paid to South Dakota. The state plus applicable municipal taxes must be added together to determine if additional tax is owed. Use tax is also due on supplies taken out of retail inventory for the business’ use. Use tax is due on these items in the filing period they are taken out of inventory
Accredited schools, non-profit hospitals, approved relief agencies and government entities are exempt from sales and use tax. Items sold FOR an exempt entity at auction are subject to sales tax. Just because an exempt entity is paying the auction clerk does not mean the items sold at the auction are also exempt from sales tax. If the auction clerk or auctioneer is paid by an exempt entity, their services are exempt from sales or use tax.
The auction clerk or auctioneer is required to keep proof of payment from the exempt purchaser. Accredited schools and relief agencies have numbers assigned by the department that should be provided to the auction clerk or auctioneer.